At a Freemium: Finding the best business strategy for your content

The shift toward the online culture known as Web 2.0 demands a rethink of our current business models. New strategies must be found to sustain the new environment.

To create sustainable business models, strategists need to think less about selling a product and more about selling a service. Or rather a series of services. This leads to different opportunities in growing specific revenue streams.

One of the most common ways to do this is the freemium business model. Think about Flickr, Basecamp and Ning. These offer decent free services, which are more than adequate for basic users. Professional users then pay a premium to unlock advanced features. In this model, the most loyal and demanding users pay for themselves and, by extension, everyone else.

Another promising business model is employed by the owners of popular platforms, offered free to mainstream users (i.e. consumers) but sold to business users. This model is used by Wordpress, the popular free blogging platform. Wordpress is also behind Automattic, a consultancy company that helps businesses to implement and use blogs.

Traditional revenue streams can also be leveraged. Advertising, for example, could benefit from a “hyperlocal” and international audience, two opposite targets very attractive to advertisers. The “glocal” approach will be increasingly popular this year as technologies can now connect people and businesses on a local basis. Think about Google, from one side selling general advertising based only on keyword relevancy. On the other side, Googleservices like Maps and Latitude are posting extremely targeted and local ads while you’re browsing.

To understand how to enhance your business model you have to ask some questions about your core business and assets.

What data and information does your media company have “freely” available as an asset? This could be news, sports records, network, etc. Next, consider who might be interested in this information. And understand where these readers are: online or offline? On social networks or in traditional news websites? Do they read newspapers or magazines?

Having chosen the right content and right audience you then have to deeply understand your audience’s behaviour. Package your content accordingly, in a sexy service that’s effectively distributable.

Who’s already doing it right? Many people and in very different ways. The US wine entrepreneur Gary Vaynerchuck, for example, set up a videoblog on which he connects to his audience (aka: his customers). After months of hard work he’s now an Internet celebrity admired for his attitude. He speaks what he thinks, even if it’s against his own interest. He sells wines online and in many of his online shows he tastes them. It’s not a rare instance for him to openly dislike the wine he sells.

A good example from Italy is Robin Good’s Master New Media magazine, in which he aggregates news and how-tos from all over the Internet to satisfy his geeky and Internet-savvy audience. He also translates into Italian many keynote speeches from popular conferences so that his Italian audience can grasp without intermediation what was said at those events.

This is a model that’s very difficult to establish. It requires time and lots of patience, but it works. Robin Good once revealed that Master New Media made more than 50,000 Euro in a month from Google AdSense revenues.

A great first step is to analyze your current user base. Understand how they behave, why they find your content interesting. What motivates them to use/not use our services. If they have the ability to add something to your data, you should analyze what they add and why.

There’s no “magic recipe” for success in the online media market. Listen to your audience. Act accordingly in an open and honest way. Your odds of success will indeed multiply. This is the only way to find your very own “magic recipe”.

Francesco Federico

Francesco Federico is an Italian entrepreneur, project management professional and blogger. When he isn't online, he's traveling, taking pictures, reading or wine tasting.For more information, visit his blog, Making Things Happen.